Apple’s Pathway to Evade Taxes

With a handful of Apple employees in a small office, the firm has made a strong corporate strategy: it has prevented millions of dollars in taxes in California and 20 other states.

The company headquarters is in Cupertino, California, but they will be putting an office in Las Vegas, just 200 miles away, to collect and invest their profits. Apple evades state taxes because the income tax in California is 8.84%, while in Nevada is 0%, according to a note from The New York Times published Sunday in print.

The newspaper argues that the creation of that office in Reno is one of the many methods that Apple used to reduce tax payments throughout the world by billions of dollars each year.

Apple has also created subsidiaries in low tax areas, like Ireland, the Netherlands, Luxembourg and the British Virgin Islands.

According to the article published Sunday, almost all large companies try to minimize their taxes and savings. Apple is especially attractive because its benefits are very high.

Wall Street analysts expect the firm could earn up to 45.600 million in its fiscal year, a record for any U.S. company.

The New York Times states that it is much easier for copyrighted firms (like Apple) and digital products to transfer their profits to low tax countries for groceries or car manufacturers.

“A downloaded application, unlike a car, you can sell from anywhere,” exemplifies the newspaper.

They added that in the past two years, 71 technology firms included in the stock market index Standard & Poor’s (including Apple, Google, Yahoo and Dell), published tax rates lower by one third to those of other companies within the index referral.

Without this kind of tactics, the payment of federal taxes in the U.S. firm would have been higher than reported last year ($2.4 million), according to a study by former Treasury Department economist, Martin A . Sullivan.

Last year, the company paid $3.3 billion in worldwide tax on profits of $34.2 billion, a rate of 9.8%. According to the newspaper, Apple does not indicate how much of that payments are made in America.

Apple responds

The newspaper said the firm pays a huge amount of taxes that help local, state and federal regulations.

According to research, in the first half of fiscal year of 2012, its U.S. operations have generated nearly $5 million dollars in federal income taxes and state, including income taxes withheld on income of employee actions.

“Apple has done all their business with the highest ethical standards, complying with applicable laws and accounting standards. We are very proud of the contributions from Apple,” the company said in a text to The New York Times on Sunday.